EXCISE TARIFF AMENDMENT (PETROL TAX CUT) BILL 2001

The bill I am introducing in the Senate today seeks not only to ease the pain of high fuel taxes, caused by the Howard Government's attempt to leach millions of dollars out of Australians through its fuel tax squeeze, but to stop this Government lining its pockets at the expense of families and communities, industries, businesses and voluntary organisations, both in the cities and the bush.

The Excise Tariff Amendment (Petrol Tax Cut) Bill 2001 amends the Excise Tariff Act 1921 to provide relief from the 1 February 2001 indexation of rates of excise duty applying to petroleum, and give much needed fuel tax relief.

Unfortunately, much of the damage that this Government has done is irreversible. The National Farmers' Federation tells us that high fuel prices and record levels of taxation have had a particularly severe impact on rural communities.

The stories told to the 35 public hearings held by the Federal Parliamentary Labor Party's petrol price inquiry, and raised in the hundreds of submissions received, show the universality of the imposts from these tax changes.

We heard stories such as that from Coral Davidson of Medowie, NSW who said:

"Daily I am getting calls from families, not just drivers any more, from their families, their wives and their daughters; `Dad has just lost the truck, the finance company has been out. We can't pay the fuel bill, we can't even operate the truck any more.' The fuel here has just overtaken every boundary that we had left."

Industries such as transport and primary production are struggling to cope with increased costs while higher fuel prices have meant a downturn in tourism. Approximately 1000 jobs will be lost as transport companies go to the wall because of higher fuel costs and the impact of the GST on business.

Fuel is a massive, and essential, input for many businesses, not only in the transport industry.

Mr Ivan Harris, a small business owner of Morwell in Victoria told us:

"The rising fuel prices have significantly increased my business running costs and it has been impossible to pass these onto the consumer, on top of the increase just applied with the GST...The Federal Government does not appear to be mindful or care about the plight of small business and like a lot of others I can see my business going to the wall with the escalating costs and I too will be another individual existing on a Government allowance."

Voluntary services as diverse as meals on wheels, medical services and school canteens are counting the cost of higher fuel prices.

Volunteer fire fighters are having to bear the costs of travelling to fight fires, which means less money for training and vital equipment.

Older Australians are particularly vulnerable. Mr John Molloy of Ballina told us:

"My wife and I are pensioners and are finding the increase in petrol prices hard to cope with. It affects our daily lives and I have never been so out of pocket because of petrol expenses. In our retirement years we like to travel, but that is now restricted. We don't even go into town as much because of petrol prices...we have just eliminated a planned trip ...taking us to Longreach...because of petrol prices. Our quality of life is being affected..."

Local Government bodies, such as the Cardwell Shire, are having to stretch their budgets further. According to the Shire's CEO in Tully, Mal Mallyon:

"Rural and regional Queensland Councils have felt the severe affects of increased fuel cost and ultimately had to pass the extra cost onto their communities."

There has also been a tangible impact on activities such as sports and recreation, particularly where public transport is lacking. This is especially devastating for small towns where such activities are the lifeblood of the community.

This is the high price that Australians have paid to give the Coalition a chance to buy its way back into office.

There can be no doubt that the Howard Government has awarded itself a massive tax bonus through the way it has structured its own fuel tax changes.

This has occurred through a combination of fuel taxes that automatically collect more revenue as world oil prices rise and the Australian dollar falls in value, and discretionary increases in fuel taxes from deliberate policy decisions, such as that these bills seek to ameliorate.

This fuel tax windfall was quantified at up to $1.5 billion this financial year by the Australian Automobile Association.

At first the Government tried to deny the existence of this windfall. Eventually the Prime Minister had to admit it existed, but maintained Budgetary constraints meant it could not be returned.

However, in its mid-year Budget review the Government showed it had a Budget windfall of $1.5 billion in 2000-01, after adopting various measures to disguise the full extent of that windfall.

The Prime Minister is now trying to tell us that his roads package is adequate compensation for higher fuel taxes.

The roads package is $1.6 billion over four years, or $400 million a year.

Where is the rest of the money going?

I would assert that in an election year it is going into the Government's election war chest. The Government is stashing away the cash so it can produce it again to use as election bribes. That tax cut they'll offer will come directly from the wallets of motorists.

No wonder Senator Kemp has refused to answer 36 questions on notice about this windfall.

These taxation changes have entrenched discrimination against rural and regional Australia. The National Party through their complicity on the GST issue have shown just how out of touch they are.

People in rural and regional areas who pay more for their petrol are now, because of the Government's tax changes, paying more tax on their petrol consumption than people in cities.

This is in spite of reduced access to public transport and a range of services in rural and regional areas.

The Australian Automobile Association has said that, "the direct effect of reducing excise and applying a GST to the retail price of petrol is to increase the gap between city and country petrol prices."

This is a gap that the Minister for Trade, Mr Vaile has, described as "unacceptable".

I agree, Mr Vaile, it is unacceptable. Unlike Mr Vaile, though, I, and the Labor Opposition, are prepared to act to ease the burden of those farmers, families, businesses and communities that are so dependent on fuel to survive.

There can be no doubt now that the Prime Minister has broken his promise that the price of petrol would not rise because of the GST.

It has - and those in rural and regional areas are the worst affected.

But the Prime Minister is refusing to budge. He's tried to shift the blame onto everything from world oil prices to the Labor party itself. He's hoping that by the time the election comes around, we'll have forgotten all about his windfall.

But there are also compelling economic reasons for holding the Prime Minister to his promise, to counter the slowing economy. The outlook for Australian business is increasingly bleak. It faces a profit squeeze which high petrol prices have contributed to. Alan Greenspan, the head of the US Federal Reserve is advocating tax cuts to boost the slowing economy, in the US. Putting up taxes in the current climate in Australia makes no sense.

In addition, these tax increases will feed into the next round of inflation figures, which will in turn add to the next excise increase, and so on it goes. This means this increase in taxes will be working against our slowing economy for some time to come.

This gives the Coalition backbench powerful social and economic reasons to support these bills.

There are now thirteen of them on the record bleating about the fuel issue, but so far refusing to do the right thing by their constituents and the economy and hold the Prime Minister to his promise.

Let me outline what they have been saying:

Trish Draper, Member for Makin, SA: "I would have to say that I am disappointed that we didn't win the argument to have the excise frozen." (ABC Radio, 1/2/2001).

Bob Katter, Member for Kennedy, Qld: has refused to commit to the Government's position, saying, "I just think it's appallingly unfair to people in country areas and we are not getting any offsets." (The Australian 2/2/2001).

Alby Schultz, Member for Hume, NSW: backed the Labor Party's calls for the Government to freeze the excise, saying "The price of fuel throughout this country and the factors that affect it is nothing short of scandalous." (Sydney Morning Herald, 20/01/2001).

Dr Sharman Stone, Member for Murray, Vic and Parliamentary Secretary to the Minister for the Environment and Heritage: said in a letter to her constituents that combined with other actions, a reduction in the fuel price, such as that from the February increase, could help. "I will continue to do all I can to try to get a break-through on the fuel price problem." she pledged. Dr Stone also said that people understood that the Government takes considerable excise from the fuel and that, "it would be absolutely accurate to say that right now my electorate is saying: Look, this tax take of both fuel, tobacco and alcohol. It's a big tax take. Give us a break." (PM, ABC Radio, 5/2/01)

Fran Bailey, Member for McEwen, Vic: has not only vowed to see the Prime Minister's petrol promise is kept (Diamond Valley News, 1/3/00) but told ABC Radio last October that she expected her call for a freeze on the excise to gain increasing backbench support. As late as last Friday, Ms Bailey refused to rule out supporting Labor's Bill (PM, ABC Radio, 2/2/01).

Peter Lindsay, Member for Herbert, Qld: has called on the Government to freeze the February excise (The Australian, 23/8/00).

Bob Charles, Member for Latrobe, Vic: said petrol pricing was a very sensitive topic in his country electorate (Herald Sun, 23/8/00).

Kay Hull, Member for Riverina, NSW: said she did not support her Government on the issue "at all", and that rural Australia deserved the money from the excise to be tied directly into new roads, rail and infrastructure (Daily Telegraph, 23/8/00). She also conceded that, "If we're not going to freeze excise I want the additional rise to go into a trust fund for rural and regional Australia." (Sydney Morning Herald, 5/2/01)

Bruce Billson, Member for Dunkley, Vic: "I am hoping that the sound economic management of this government might produce further opportunities for further tax cuts, because fuel taxes should be fairly and squarely on the table" (23/8/00).

Alex Somlyay, Member for Fairfax, Qld: supported the need for a parliamentary inquiry, saying it should examine the relationship between world parity pricing and domestic fluctuations. "I have not seen a good explanation for petrol prices going up and down by 8 cents or so a litre overnight". (Courier Mail, 22/8/00).

Kathy Sullivan, Member for Moncrieff, Qld: said there was a perception the oil companies were profiteering and an inquiry was overdue. "The whole subject needs to be aired." "I personally do not understand how a price that goes up overseas today means it goes up 10c a litre overnight on the Gold Coast" (The Australian, 17/8/00).

The Speaker of the House, the Hon Neil Andrew, Member for Wakefield, SA: published a booklet in his electorate that stated: "...at current price levels, the reduction in excise has not been enough to offset the effect of the GST...".

Barry Haase, Member for Kalgoorlie, WA: Admits that fuel prices are a matter of great concern to him, and sympathises with "householders and business operators whose budgets for the coming year have been left in tatters by the incredible swiftness with which prices rose above the $1 per litre mark during the latter stages of this year." (Haase Report, 22/11/00).

Some of them have made their views known to the Prime Minister directly, but he's chosen to ignore them.

He's cut them, and their constituents, adrift.

Labor's bills give them a clear choice - either stand up the Prime Minister and ease the burden on your constituents, or go back to your electorates and say they caved in yet again.

I issue the same challenge to their colleagues in the Senate.

No doubt they have also heard much from their constituents on this matter, particularly Senator McGauran from Benalla, where unleaded petrol is 96.9 cents per litre today, Senator Sandy Macdonald from Tamworth, where unleaded petrol is 94.9 cents per litre today, Senator Ian McDonald (Townsville - ULP is 88.4 cents per litre and Rockhampton - ULP is 90.6 cents per litre), and Senator Newman and Senator Watson, from Launceston (ULP is 98.9 cents per litre).

Senators, in the interests of motorists, farmers, businesses, families, communities, volunteers and older Australians, we seek your support for these bills.

Advice from the Clerk Assistant (Procedure) in the Senate in relation to the bill is reproduced as below:

6 February 2001

Senator the Hon. Peter Cook

Suite SG.96

Parliament House

CANBERRA ACT 2600

Dear Senator Cook

You have asked for advice on whether there is any difficulty in introducing the proposed Excise Tariff Amendment (Petrol Tax Cut) Bill and Customs Tariff Amendment (Petrol Tax Cut) Bill in the Senate on the grounds that the bills are "money bills".

The term "money bill" is often used inappropriately to describe any bill that involves the expenditure or raising of money. This can sometimes lead to confusion about the scope of the Senate's powers in relation to financial legislation. The only limitations on the Senate's powers in this regard are those set out in section 53 of the Constitution which provides that:

Section 53 also provides that where the Senate is prohibited from amending a bill, it may request the House of Representatives to make amendments.

The proposed bills to reduce petrol excise do not fall within any of the relevant limitations described in section 53. They do not appropriate money and they do not impose taxation. Whereas a bill that increases taxation is regarded in accordance with the precedents of the Senate as a bill imposing taxation and may therefore not originate in the Senate, the proposed bills reduce taxation. They cannot, therefore, be classified as bills imposing taxation. There can be no dispute that the proposed bills are bills which may originate in the Senate.

A full discussion of these issues can be found in Chapter 13 of Odgers' Australian Senate Practice (9th edn, electronically updated to 30 June 2000), particularly at pages 308-311.

Please let me know if I may be of any further assistance.

Yours sincerely

Rosemary Laing

Clerk Assistant (Procedure)

Telephone: (02) 6277 3380

Fax: (02) 6277 3289

E-mail: ca.procedure.sen@aph.gov.au

I commend this bill to the Senate.

CUSTOMS TARIFF AMENDMENT (PETROL TAX CUT) BILL 2001

This bill seeks to make an amendment to the Customs Tariff Act 1995, to provide relief from the 1 February 2001 indexation of rates of customs duty applying to petroleum.

This bill mirrors the provisions contained in the Excise Tariff Amendment (Petrol Tax Cut) Bill 2001.

I commend the bill to the Senate.